The ex­emp­tion of sales tax and cus­toms duty on im­port of books is purely a time bound fis­cal mea­sure and public in­ter­est tar­get.

The Op­po­si­tion party in the press re­lease is­sued last Tues­day stated that the ex­emp­tion of sales tax and cus­toms duty on the im­port of books is un­con­sti­tu­tional and vi­o­lates Sec­tion 14, Sec­tion 1 of the Con­sti­tu­tion of the King­dom of Bhutan. The press re­lease fur­ther states that the Min­istry of Fi­nance vide its no­ti­fi­ca­tion dated 24th July, 2015 had ex­empted pay­ment of cus­toms duty and sales tax on all books im­ported dur­ing 2015 in or­der to en­cour­age all Bhutanese to read, es­pe­cially in the con­text of the Na­tional Read­ing Year 2015.

While the op­po­si­tion party ap­pre­ci­ates that it has been done for a good cause to sup­port the “Year

of Read­ing”, the ex­emp­tion is in vi­o­la­tion of the Ar­ti­cle 14, Sec­tion 1 of the Con­sti­tu­tion which states that “Taxes, fees and other forms of levies shall not be im­posed or al­tered ex­cept by law”, which is also pro­vided for in Sec­tion 9 of the Public Fi­nance Act (Amend­ment) 2012.

The pro­vi­sions cited by the Min­istry of Fi­nance from the Sales Tax, Cus­toms and Ex­cise Act 2000in the no­ti­fi­ca­tion to au­tho­rize this ex­emp­tion are null and void as per Ar­ti­cle 1 Sec­tion 14 of the Con­sti­tu­tion and the Supreme Court’s ver­dict on the first con­sti­tu­tional case be­tween the Gov­ern­ment and the Op­po­si­tion Party. The ver­dict states “the in­con­sis­tent pro­vi­sions of the Sales Tax, Cus­toms and Ex­cise Act 2000 must be deemed to have been eclipsed by the lat­ter law.” The lat­ter law here refers to the Con­sti­tu­tion and the Public Fi­nance Act 2007. The ex­emp­tion of taxes with­out due par­lia­men­tary process is a di­rect vi­o­la­tion of the Con­sti­tu­tional pro­vi­sion and it clearly tan­ta­mount to al­ter­ation of taxes.

The Supreme Court Judg­ment fur­ther states: “Im­pos­ing and al­ter­ing of taxes must be de­cided by the elected rep­re­sen­ta­tives of the peo­ple in its en­tirety and not only by a sub-group rep­re­sented by the ex­ec­u­tive.”

“Un­der no cir­cum­stances the au­thor­ity to im­pose or al­ter taxes may be del- egated to the Ex­ec­u­tive…. The im­po­si­tion or al­ter­ation of taxes must com­ply with the leg­isla­tive process for mak­ing laws at all times as pro­vided un­der sec­tions 234-238 of the Na­tional Assem­bly Act.”

The Op­po­si­tion Party is deeply con­cerned with the re­peated un­law­ful acts of the Gov­ern­ment. While it is not the in­ten­tion of the op­po­si­tion to stop the in­cen­tives to the book deal­ers, but urge the Gov­ern­ment to abide by the pro­vi­sions of the Con­sti­tu­tion and the rul­ing of the Supreme Court on the first Con­sti­tu­tional case and fol­low the due leg­isla­tive process in all its ac­tions.

The gov­ern­ment has how­ever said that ex­emp- tion on sales tax and cus­toms duty is purely a time bound fis­cal mea­sure but did not abol­ish the cus­toms and sales tax on the im­port of books in to­tal­ity as in­cen­tive are time-bound and public in­ter­est tar­geted.

“The tax­a­tion on books has only been sus­pended for a year to du­ti­fully com­mem­o­rate the Read­ing Year 2013 in the in­ter­est of Gen­eral Public.”

The gov­ern­ment has ex­empted sales tax and cus­toms duty on im­ported books on the ba­sis Sales Tax, Cus­toms and Ex­cise Act. It says, “On the sat­is­fac­tion and in the public in­ter­est, the Min­istry of Fi­nance may ex­empt a per­son from pay­ment of Bhutan Sales Tax.”

The Min­istry of Fi­nance in a no­ti­fi­ca­tion on 24th July this year has ex­empted all books im­ported dur­ing 2015 from the levy of cus­toms duty and sales tax. Ear­lier the im­ported books are sub­jected to 20% cus­toms duty and 5% sales tax as per the Bhutan Trade Clas­si­fi­ca­tion Bhutan Sales Tax sched­ule and Cus­toms tar­iff. There is no cus­toms duty on goods im­ported from In­dia. The no­ti­fi­ca­tion fur­ther states that the levy of cus­toms duty on books is not at all a new tax and has been levied even in the past. How­ever books con­sid­ered as low risk prod­ucts phys­i­cal ver­i­fi­ca­tion of the books was not car­ried out.